Imagine a global financial force ballooning to over $13 trillion and accelerating toward $21 trillion as institutional hunger transforms how wealth is built and managed, reshaping the investment landscape from private equity to infrastructure and beyond.
Key Takeaways
- Global alternative assets under management (AUM) grew to $13.32 trillion by the end of 2022, marking a 12% increase from 2021
- Alternative AUM is projected to reach $21 trillion by 2026, driven by institutional demand
- North America holds 52% of global alternative AUM at $6.9 trillion as of 2022
- Global private equity fundraising reached $1.2 trillion in 2022, down 20% from 2021 peak
- Hedge fund net inflows were $120 billion in 2022 amid volatility
- Private credit fundraising hit $220 billion in 2022, up 25% YoY
- Global PE buyout performance net IRR averaged 15.2% for 2017-2021 vintages
- Hedge funds delivered 8.5% net return in 2022 vs -18% for S&P 500
- Private credit loans averaged 9.8% yield in 2022
- 55% of institutional investors increased alternative allocations in 2022 surveys
- Pension funds average alternative allocation rose to 14% in 2022 from 12%
- SWFs held 35% of portfolios in alternatives end-2022
- Global alternatives AUM expected to double to $23tn by 2027 at 12% CAGR
- Private credit to grow fastest at 15% CAGR to $2.7tn by 2028
- Retail access to alternatives via ETFs to reach $1tn AUM by 2030
The alternative asset management industry is rapidly growing and diversifying across global markets.
Fundraising & Capital Flows
- Global private equity fundraising reached $1.2 trillion in 2022, down 20% from 2021 peak
- Hedge fund net inflows were $120 billion in 2022 amid volatility
- Private credit fundraising hit $220 billion in 2022, up 25% YoY
- Real estate fundraising totaled $85 billion in 2022, down from $140 billion in 2021
- Infrastructure fundraising reached $115 billion in 2022, record high
- Venture capital fundraising was $250 billion in 2022, down 35% from 2021
- North America captured 55% of global PE fundraising at $660 billion in 2022
- Europe PE fundraising fell to $200 billion in 2022 from $300 billion prior year
- Asia VC fundraising dropped to $70 billion in 2022
- First-time PE funds raised $45 billion in 2022, representing 4% of total
- Mega PE funds (> $5bn) accounted for 40% of 2022 fundraising at $480 billion
- Dry powder as % of PE AUM rose to 55% in 2022
- Pension funds committed $250 billion to alternatives in 2022
- SWFs allocated $150 billion to PE and infra in 2022
- Insurance companies' alternative commitments hit $100 billion in 2022
- Retail investor inflows to alternatives via evergreen funds reached $50 billion in 2022
- Average PE fund size grew to $450 million in 2022 from $350 million in 2017
- Closed-end alternative fund launches numbered 2,500 in 2022
- Private debt fund closings averaged 180 days in 2022, down from 200 days
- GP-led secondaries fundraising surged to $35 billion in 2022, up 50%
- Continuation vehicles raised $25 billion in 2022 for PE GPs
- US endowments committed 15% more to alternatives in 2022 vs 2021
- European family offices increased alternative allocations by 10% in 2022 fundraising
- Hedge fund capacity constrained fundraising to $100 billion net in Q4 2022
- Infrastructure equity fundraising was $80 billion in 2022, 70% core/core+
- Real estate debt fundraising reached $30 billion in 2022
- VC mega-rounds (> $100m) totaled $120 billion in 2022 fundraising
- Private equity distributions to LPs were $500 billion in 2022, down 15%
Fundraising & Capital Flows Interpretation
Despite a global economic temper tantrum in 2022, the alternative asset management industry proved it was less a monolith and more a cleverly diversified organism, one where capital decisively fled frothy venture capital and real estate to seek safer, sturdier harbors in private credit and infrastructure, all while massive, established players consolidated their power and impatient dry powder piled up like unspent ammunition.
Investment Performance
- Global PE buyout performance net IRR averaged 15.2% for 2017-2021 vintages
- Hedge funds delivered 8.5% net return in 2022 vs -18% for S&P 500
- Private credit loans averaged 9.8% yield in 2022
- Core real estate returns were 7.2% in 2022 globally
- Infrastructure funds returned 10.1% net IRR for 2018 vintage
- VC median net TVPI was 2.1x for 2018 vintages as of 2022
- PE growth equity outperformed buyout with 18% IRR in 2022 data
- Hedge fund equity strategies returned 5.2% in 2022
- Direct lending private credit DPI reached 0.85x for 2020 vintage in 2022
- Value-add real estate IRR averaged 12.5% for recent funds
- Natural resources energy funds returned 15% in 2022 amid price spikes
- Multi-strat hedge funds averaged 9% return in 2022
- PE buyout MOIC was 1.8x median for 2019 vintages end-2022
- Infrastructure core returns stabilized at 6.8% in 2022
- Late-stage VC returns hit 25% IRR for top quartile 2017 vintage
- Distressed debt strategies returned 12% in 2022 hedge funds
- Opportunistic real estate funds IRR 14.2% average 2022 data
- Private equity NAV discounts averaged 10% for listed vehicles in 2022
- Quant hedge funds underperformed with 4.5% return in 2022
- Secondaries PE transactions yielded 2.5x MOIC historically to 2022
- Core+ infrastructure DPI 0.92x for mature funds end-2022
- Biotech VC subsector IRR 20% top quartile 2016-2020 vintages
- Macro hedge funds gained 11.2% in 2022
- Private real estate total returns 8.1% US in 2022
- PE co-investment IRR averaged 17% for 2018-2021 deals
- Event-driven hedge returns 6.8% 2022
- Renewable energy infra funds returned 9.5% IRR recent vintages
- Early-stage VC median IRR -5% for 2020 vintage interim 2022
- Relative value arb hedge funds 7.1% return 2022
- Top decile PE funds IRR 25%+ for 2017 vintage end-2022
- Pension funds' alternative portfolios returned 9.2% in 2022 average
- SWFs alternative returns averaged 8.5% annualized to 2022
Investment Performance Interpretation
While the public markets threw a tantrum in 2022, the alternative asset class quietly held a masterclass in getting paid across the board, proving that true diversification is less about hiding and more about finding where the money is actually flowing.
Investor Behavior
- 55% of institutional investors increased alternative allocations in 2022 surveys
- Pension funds average alternative allocation rose to 14% in 2022 from 12%
- SWFs held 35% of portfolios in alternatives end-2022
- Endowments/Foundations averaged 60% in alternatives in 2022
- Insurance firms allocated 8% to alternatives in 2022, up from 6%
- Family offices targeted 20% alternatives allocation in 2023 plans per 2022 survey
- 65% of HNWIs planned more alternatives exposure post-2022
- Retail platforms saw 30% YoY growth in alternative product sales in 2022
- 40% of investors sought evergreen structures for alternatives in 2022
- ESG criteria influenced 70% of LP commitments to alternatives in 2022
- Co-investments direct by LPs rose 25% to $100 billion in 2022
- 50% of LPs reported satisfaction with PE fee structures in 2022 surveys
- Separates accounts grew to 25% of institutional alternative mandates in 2022
- Asian SWFs increased US alternatives exposure by 15% in 2022
- 75% of European pensions targeted private credit growth in 2022
- US public pensions averaged 11% illiquids allocation end-2022
- 60% of investors diversified into infrastructure post-2022 inflation
- Family offices LP commitments averaged $50m per fund in 2022
- Retail alternative AUM via SMAs grew 40% to $200bn in 2022
- 45% of LPs negotiated lower fees successfully in 2022 fundraising
- Middle East SWFs committed 20% more to PE in 2022
- Canadian pensions held 25% in alternatives, highest globally
- 55% of investors prioritized liquidity terms in 2022 commitments
- HNW alternative platforms onboarded 2m new clients in 2022
- 70% of LPs conducted more due diligence on GPs in 2022
- US endowments rebalanced to 65% alternatives post-2022 losses
Investor Behavior Interpretation
The relentless march of capital into alternatives—from cautious pensions to swashbuckling family offices—paints a clear picture: the smart money is chasing complexity, control, and uncorrelated returns while grumbling about fees but signing the check anyway.
Market Size & Growth
- Global alternative assets under management (AUM) grew to $13.32 trillion by the end of 2022, marking a 12% increase from 2021
- Alternative AUM is projected to reach $21 trillion by 2026, driven by institutional demand
- North America holds 52% of global alternative AUM at $6.9 trillion as of 2022
- Europe alternative AUM stood at $3.8 trillion in 2022, representing 29% of global total
- Asia-Pacific alternative AUM reached $1.6 trillion by end-2022, up 15% YoY
- Private equity AUM hit $4.5 trillion globally in 2022
- Hedge fund industry AUM grew to $4.3 trillion in 2022 despite market volatility
- Real estate alternative AUM was $1.4 trillion in 2022
- Private debt AUM expanded to $1.7 trillion by 2022
- Infrastructure assets AUM reached $1.2 trillion in 2022
- Venture capital AUM stood at $0.5 trillion globally in 2022
- Natural resources alternatives AUM was $0.62 trillion in 2022
- Alternatives dry powder reserves hit $2.9 trillion in private equity alone by 2022
- Total alternative AUM CAGR from 2017-2022 was 11.5%
- US alternative AUM share increased to 55% of global total in 2022
- Alternative AUM as percentage of total AUM rose to 15% in 2022 from 12% in 2017
- Emerging markets alternative AUM grew 18% YoY to $0.8 trillion in 2022
- Multi-alternatives strategies AUM reached $0.9 trillion in 2022
- Pension funds allocated 12% to alternatives on average in 2022, boosting AUM growth
- Sovereign wealth funds held $2.1 trillion in alternatives AUM in 2022
- Alternative AUM per capita in US was $18,000 in 2022 vs $4,000 in Europe
- Digital assets alternative AUM surged to $0.1 trillion in 2022
- ESG-focused alternative AUM grew to $0.7 trillion by 2022
- Global alternatives AUM forecast to grow at 10% CAGR to 2027
- Hedge fund AUM in Asia reached $0.6 trillion in 2022, up 14%
- Private equity AUM in Europe hit $1.6 trillion in 2022
- Real assets AUM (ex-RE) grew 13% to $1.0 trillion in 2022
- Alternatives penetration in high-net-worth portfolios reached 25% in 2022
- Total alternative managers numbered 12,500 globally in 2022
Market Size & Growth Interpretation
While North America's $18,000 per capita alternative AUM suggests everyone there owns a secret hedge fund, the real story is a $13.3 trillion global march toward alternatives, proving that when traditional markets wobble, the smart money builds its own playground.
Regulatory & Future Trends
- Global alternatives AUM expected to double to $23tn by 2027 at 12% CAGR
- Private credit to grow fastest at 15% CAGR to $2.7tn by 2028
- Retail access to alternatives via ETFs to reach $1tn AUM by 2030
- ESG alternatives projected at $5tn by 2030, 25% of total alts
- AIFMD II to impact 20% of EU alternative fundraising from 2024
- SEC private fund rules to increase reporting burdens by 30% from 2024
- Tokenized alternatives market to hit $10tn by 2030 per projections
- GP stakes market to grow to $50bn AUM by 2027
- Evergreen funds to represent 40% of new alt launches by 2025
- AI-driven alt management to cut costs 20% by 2027
- Infrastructure AUM forecast $2tn by 2027, driven by energy transition
- VC recovery expected with $300bn fundraising in 2024
- Fee pressure to reduce alt management fees to 1.2% by 2027 from 1.5%
- Secondaries volume to triple to $200bn annually by 2027
- Digital infrastructure (data centers) to attract $500bn by 2030
- Basel IV to constrain bank lending, boosting private credit 20% growth
- UK Long-Term Asset Fund regime to unlock £50bn retail alts by 2027
- 50% of alts to be semi-liquid by 2030 via new structures
- Climate infra investments to reach $3tn cumulative by 2030
- Operational due diligence to become mandatory for 60% LPs by 2025
- Alt data usage in hedge funds to rise 40% by 2027
- PE exits to rebound to $800bn in 2024 post-2022 slowdown
- UCITS alternatives to grow to $2tn AUM by 2028 in Europe
Regulatory & Future Trends Interpretation
In the relentless pursuit of yield, the alternative investment industry is feverishly transforming itself—facing down regulators, embracing AI and tokenization, chasing retail money, and greenwashing where necessary—all while promising to double in size and become slightly less exclusive, but only slightly.
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